No Plans to Introduce Sunset Clause for Old Tax Regime: CBDT Chairman as Majority of Taxpayers Shifting to New Regime

The New Tax Regime has been opted for by around 88% of the individual taxpayers. The CBDT Chairman, Ravi Agrawal, on Wednesday said that despite the majority of taxpayers choosing the old tax regime, the government is not considering introducing a sunset clause for filing income tax returns under the old tax regime.

Taxpayers are allowed to choose the tax regime that benefits them the most. The new tax regime offers reduced tax rates but does not give the deductions and exemptions that are available in the old tax regime. Even after this, the response to the new tax regime has been positive.

“I can tell you that when ITR 1, 2, 3 and 4 are taken together (income tax return forms used by individuals), about 88% of people have moved to the new tax regime, ” he said during a post-budget interview.

He also mentioned that this shift is even more pronounced in presumptive tax cases, where about 97% of the taxpayers under the presumptive taxation have shifted to the new tax regime.

Agarwal further added that the corporate entities are also moving towards the new regime, with 60% of the income being reflected under the new tax regime.

While talking about the changes announced in Budget 2026 regarding the MAT (Minimum Alternate Tax) provisions, he said that these amendments will encourage more people to shift towards the new tax regime. Budget 2026 has proposed MAT to be the final tax and reduced the rate from 15% to 14% for companies in the old tax regime. Currently, the MAT is applicable when the company’s income tax liability under the normal provisions is less than 15% of their book profits.

He also talked about the Budget 2026 proposal to increase the STT (securities and transaction tax), saying that it will discourage retail investors from aggressively taking up this exercise. The government has proposed an increase in the STTs for futures contracts, from 0.02% to 0.05%, and for options premiums, the rate will rise from 0.1% and 0.125% to 0.15%.

“Only time would tell how much it would curb, but this is an attempt from the department and the government to actually at least address this issue and flag this issue,” Agarwal said.

He also said that he was confident that the direct tax collection target for the 2025-26 fiscal year, revised to Rs 24.21 lakh crore in the recent budget, will be met.